3 Environmentally Friendlier Energy Investments

Sometimes, investing in the energy space can be an internal battle between doing what's best for your wallet and what's best for the environment. While many of us may want to get in on the ground floor of the next great alternative-energy idea, it's hard to pass up the financial stability of a high dividend-yielding oil or coal company.

Fortunately, there are some investment strategies that can bridge the gap between these two competing ideals. Let's look at three ways you can invest in the energy sector and still get a decent night's rest.

It's OK to invest in natural gasYes, natural gas is a fossil fuel. And yes, it does emit carbon dioxide. But when you compare it with the other fossil fuels we burn, it is much, much better. When compared with a coal plant, a natural gas-fired plant will emit half the carbon dioxide, one-third the nitrogen oxides, 1% of the sulfur dioxides, and almost no mercury. Consider that since 2007, the U.S. has reduced its total carbon dioxide levels to where they were in 1994, thanks mostly to a shift from coal-fired generation to gas generation.

Want to know the best part about this shift? It's happened almost exclusively because of the price advantage that natural gas has over coal. The surge in U.S. gas production in the past couple of years sent gas prices to 12-year lows last year. Although the price has climbed since then, it's still cheap enough that many utility companies are still using it in place of coal. Exelon CEO Christopher Crane has said that U.S. utilities will shut down 19 gigawatts' worth of coal plants between now and 2015, and former coal-heavy generator Duke Energy has plans to bring 2.8 gigawatts of new natural gas-powered plants online by the end of this year.

Natural gas isn't the perfect solution, but in terms of environmental impact, it's definitely a better solution than coal. If we can reduce carbon emissions in a way that's less expensive than the way we are doing it right now, that's a win for all parties involved.

Scared of hydraulic fracturing? Pick the names that will clean up afterward.Many people have voiced their concerns over the fluids used in hydraulic fracturing and the risks they may pose. Certainly, it would be a problem if these fluids were simply dumped, but the EPA mandates that fracking water disposed of either on the surface or in underground injection wells must meet the same requirements as municipal wastewater under the Safe Drinking Water Act. According to Chesapeake Energy , it requires on average 5.6 million gallons of water to complete a well, and so the cost to use fresh water and dispose of it for every new well would be extremely cost-prohibitive. That's why you're seeing more and more exploration and production companies moving toward reusing fracking fluids and treating them for safe disposal.

There are two major companies dealing with the treatment of fracking fluid: Heckmann and Clean Harbors . Several other companies deal with certain segments of the hydraulic fracturing process, but these two offer the most complete options for companies looking to deal with spent fracking fluid. Drilling in the U.S. may remain flat for 2013, but the industry still plans to drill about 42,000 wells. At 5 million gallons a well, there will be plenty of work for these kinds of companies.

Again, this isn't a perfect investment for the environmentally conscious, but it takes some of the sting out of hydraulic fracturing.

If you want clean technology, go bigInvesting in cleantech companies can be risky because they generally only provide one product. So looking at a company that has a more diverse offering might help to mitigate that risk. One of the largest alternative-energy manufacturers -- and, coincidentally one of the largest manufacturers, period -- is General Electric . Not only would investing in GE be a safer bet than going with a pure alternative-energy play, but you'd also be investing in the best technology in the business. This past January, GE submitted the most efficient solar cell ever to the U.S. Department of Energy, passing industry leader First Solar along the way. If solar isn't the way you want to go, then GE also has products and services for wind, hydro, and nuclear.

Perhaps some of GE's sectors aren't as environmentally friendly as others, but you can be much more certain that the company will make a return on your investment while still spearheading new R&D in alternative technology.

What a Fool believesThe alternative-energy space can reap rewards for those who pick the right ones, but overall it's still a risky game. These investment ideas are just a few simple ways to appeal to both your conscience and your financial future, but certainly don't use them as the entirety of your decision-making process. Let the Fool help you get started by checking out our premium research report on GE, which will guide you through some of the steps the company is taking to make it more competitive in a global environment. With the report, you'll also get up-to-date news and analysis on this cornerstone of American manufacturing. Get started today by clicking here.

Fool contributor Tyler Crowe owns shares of Heckmann. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool.The Motley Fool recommends Exelon; owns shares of Clean Harbors, General Electric, and Heckmann; and has options on Heckmann and Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.